Applying for a mortgage loan can be a complicated and daunting task, but it doesn’t have to be. With a little bit of research and preparation, you can save yourself a lot of time and money. In this blog post, we’ll give you a few tips on how to structure your mortgage loan for maximum savings.
Top tips for structuring your mortgage loan for maximum savings
1) Find the right lender
A lender that has the credit policies you need is the one for you. There’s no use finding a lender with a great headline rate only to discover you don’t meet their credit policies or they won’t lend to you. Whether you’re buying with a low deposit, a unit in a high-rise development, house and land package, unit below 40m2, are self-employed, work contract, casual, have had credit issues in the past, receive large bonuses or commission income, there are many reasons why a particular lender and/or loan product won’t be available or suitable for you.
2) Find the right loan
Look at the features and find the ones that are best suited for you. The most common features that people find useful are offset accounts, unlimited repayment and redraw and the quality of the online banking (including third party transfer limits) platform.
3) Shop around for the best interest rate.
Once you’ve found a lender that has the right credit policies that suit your circumstances, you can try and find the best interest rate available. You can use websites like Bankrate.com or Mortgage Loan Calculator to compare rates from different lenders. However, the major lenders (i.e. CBA, NAB, Westpac and ANZ – and some of their subsidiaries) only provide their best rates through a broker and/or once an application has been lodged directly with them.
4) Get pre-approved for a loan.
Once you’ve found a few lenders that you’re interested in working with, the next step is to get pre-approved for a loan. This means that the lender will take a look at your financial history and credit score to determine how much they’re willing to lend you. Getting pre-approved for a loan will give you a better idea of how much house you can afford and what kind of interest rate you’ll be able to get.
5) Choose the right term length.
Another important factor to consider when taking out a mortgage loan is the term length. The term is the amount of time that you have to repay the loan, and it can range from 5 years all the way up to 30 years. Choosing the right term length is a personal decision, but it’s important to remember that the longer the term, the lower your monthly payments will be but the more interest you’ll end up paying over time.
6) Make extra payments when possible.
In addition to making your regular monthly payments, try to make extra payments whenever possible. Even an extra $50 or $100 per month can make a big difference over the life of the loan. Making extra payments will help you pay off your loan faster and save money on interest charges.
7) Refinance if rates drop.
Finally, don’t be afraid to refinance your mortgage if interest rates drop after you’ve already taken out your loan. Refinancing can save you thousands of dollars over the life of your loan, so it’s definitely worth considering if rates go down after you’ve already locked in your rate.
Taking out a mortgage doesn’t have to be complicated or expensive if you know what you’re doing. By following these simple tips, you can save yourself a lot of time and money when applying for a home loan. Remember to shop around for the best interest rate, get pre-approved for your loan, choose the right term length, make extra payments when possible, and don’t be afraid to refinance if rates drop after you’ve already taken out your loan.
Of course, having the right mortgage broker can help with all of these things (and so much more). If you’re ready to start the ball rolling for your own mortgage, book a confidential and obligation-free chat with me here.
